At times, it must seem surreal being a university lecturer in Scotland. One day, academics in Dundee find themselves on the streets to protest against job and funding cuts, their institution the latest university paring back costs. The next, they are being beguiled by promises from ministers of above-inflation rises in central funding and predictions that heavier investment in higher education is the key to Britain's future prosperity.

It must be difficult trying to reconcile their experiences with the headlines. The apparent contradictions jump out of the newspapers with increasingly frequency. Ministers, led by Gordon Brown, have said in the past month that universities and colleges must educate half of all Britain's workforce by 2020. Meanwhile, a fledgling rural campus in Dumfries has lost its prestigious tie-up with Glasgow University, staff at Strathclyde have absorbed 250 job losses, Glasgow Caledonian has introduced voluntary redundancies, and Stirling warned of a £1.8m budget shortfall.

Unusual times

But these are unusual times. Scotland is preparing for one of the most significant elections in recent years, in which the Labour-led coalition faces losing power after eight years in charge of the devolved parliament in Edinburgh. For the first time in its history, the pro-independence Scottish National party could become Scotland's largest party on May 3, taking control at Holyrood. Most opinion polls put it several points ahead of Labour.

In parallel, Gordon Brown is limbering up to become prime minister, while trying simultaneously to stem the nationalist tide at home. Both the chancellor and the Scottish Labour party have put education at the centre of their campaigning.

The seeming contradictions were highlighted one Monday in late February, when the umbrella organisation Universities Scotland, which represents principals, asked the Scottish executive for a funding increase of £168m - some 15% above inflation - over the next three years. That would include £55m for salaries, pensions and utilities, £24m to fund a further 4,000 undergraduate places and £12m to pay for 2,000 additional postgraduate places. That money would also, crucially, help Scottish ministers to avoid reopening the highly charged debate over introducing tuition fees in Scotland.

This ambitious demand was particularly well-timed. That day, the Scottish Labour leader and first minister at Holyrood, Jack McConnell, made a keynote speech to the Scottish Funding Council (SFC) and the National Union of Students, in which he committed his party to real-term, year-on-year increases in higher education after May 3. "Labour believes that this is not the time to change direction, or stall the pace of progress. It is time to accelerate, to build on what we have achieved, and to deliver success for Scotland," he said. The SNP and Liberal Democrats matched that by also promising above-inflation spending increases.

What was lacking in McConnell's announcement, however, was any detail. The same precision is absent from the chancellor's promises to make Britain a "knowledge economy" based on substantially increasing the number of "highly skilled graduate jobs" in the UK economy by 2020. At a speech given alongside the Microsoft founder, Bill Gates, at the Scottish parliament last month, Brown said investing in education was a "long-term national purpose ... the challenge today is to move from being above average to being at all times truly world class."

Sir Muir Russell, the convenor of Universities Scotland and principal at Glasgow University, says these were "encouraging aspirations", which broadly fit the agenda set out in the paper calling for that £168m funding increase. Even so, he adds, there is "a fuzziness in the language" from ministers about where the money will be spent and how much will be spent.

The furore over Glasgow's decision to phase out its small undergraduate department on the Crichton campus in Dumfries has emerged as a test of the government's rhetoric, particularly on lifelong learning. It illustrates the often wide gap between an aspiration and its final delivery.

Crichton opened in 1997 to finally bring higher education to the south-west of Scotland, and is now a collaboration between four institutions: the University of Paisley; Dumfries and Galloway College; Bell College, based south of Glasgow; and Glasgow itself.

For its students - many the mature women the chancellor is so keen to see getting degree-level qualifications - it is a great success. Ministers in the Scottish executive championed it as proof of their commitment to expanding access. Glasgow, however, could not make the business model work. Given funding for only 22 undergraduate places each year, an £879,000 deficit emerged. Last month, the university's ruling court decided its presence there was unsustainable, after the SFC rejected Glasgow's appeals for additional funds to meet the full costs of staffing and running its outpost.

Multi-campus model

Critics correctly warn that the Dumfries campus has now lost much of its prestige and appeal. One of Europe's oldest universities, Glasgow ran the only liberal arts courses at Crichton, elevating it from business college status. However, Bell and Paisley announced this month they are to merge to form the West of Scotland University, and Crichton will be a key component of its multi-campus model.

There is a slim chance the SFC may bow to pressure and find the extra funds Glasgow wants. But Russell, an experienced former civil servant who oversaw Scotland's uneasy transition to devolution as permanent secretary to the Scottish executive from 1998 to 2003, insists Glasgow is not playing "brinkmanship" with Crichton, nor is the university planning to find the funding internally. Once the current first-year intake graduates in three years, Glasgow's direct relationship with Crichton will finish, he confirms. "That is the take-home message," he says. "I think that just has to be accepted."

The wider redundancies and cost-cutting are not evidence of a sector in crisis - far from it, he claims. They are the result of universities rigorously controlling costs after having to absorb a budget-stretching three-year lecturers' pay deal in 2004, which saw salaries rise by 13%. His own university announced that 230 posts would be shed last year.

"We are precisely not in crisis and we're not going to get into crisis. We're managing the position," he says. "If you look at the figures for Dundee, it was half a million pounds. It's not exactly a freefall, and what they're doing there is managing the thing so they don't get into crisis. Which is what we did in Glasgow, with voluntary severance and budget reductions we introduced three years ago.

"We're at the limits of affordability with the last three-year pay deal. This is just people making the adjustments necessary to keep things right." It is, he says, "a sector that's balancing its books and being prudent, and also a sector which says we can do greater things".